Too much have been written about the bad effect on us, so much so I decided to think. In these sort of circumstances, the doomsayers will add onto other doomsayers and create a downward spiral, and in the end, people may just very well say the end of the world is tomorrow. 

Time and time again, people have forgotten the key to human success as a race is our very own ingenuity and will to survive. I believe if oil prices were to maintain at current level of USD140/barrel or more, the positive impact will be, alternative and greener fuel will be commercially viable much sooner. Remember Thomas Malthus, in 1796 this English bloke wrote a book talking about the world will eventually run out of land to produce food for the growing population. People need to eat and also to have sex resulting in more babies and more mouth to feed. People grow in geometric progession and food grow in arthimatical progression (remember our add-math? ). Anyway he has been proven wrong, the world population probably have grown 10 times more but the land for food cultivation has grown much lesser. It is understandable that he made such an assumption because he was born 100 years before the industrial revolution. The productivity per hectare of land has grown so much since then, with better farming equipment, irrigation, breed, pest control etc.

The high oil prices have motivated businesses and government to build and experiment on solar, wind, tidal or even fusion energy. Most of these projects requires huge investments because they are new and not in mass production yet. It is now commercially viable. Coupled with the gloabl fear started by Al Gore’s famous ‘An Inconvenient Truth’ I guess it all will come to a happy ending.

Burning fossil fuel actually has a very high cost if we were to include the price of cleaning up the environment caused by the pollution. We are just deferring such expenses to our future generation. I think it is up to us now to do something about it, and the high oil price could just be a blessing in disguise.

Its about time….

I got a good feedback from one of my friends saying that my blog is not controversial enough. My objective is to inform, and adult readers need to be entertained while they learn. So I am going to be bit more edgy this time, taking on the large fund management industry as whole without pin pointing anyone in particular.

More than 50 years ago, while studying in Princeton, founder of Vanguard fund, Jack Bogle wrote a thesis, suggesting that mutual fund is the way to go, because they will have professional fund managers equipped with all the necessary information. The Pros will surely do a better job at investing as compared to the average Joe who are investing based on limited information or hearsay. According to him, this will make the stock market less volatile, thus better for the economy and the investors as well.

Fast forward 50 years later, more than 70% of US stocks are owned by institutional investors, up from 10% when Bogle wrote his thesis. However, the market “herd mentally is still very much alive”. The reason is because the main objective of fund manager is to make sure investors keep their money with them. Making sure the fund perform is one of the ways to convince investors to put more money into the fund. In a volatile market, running with the crowd seems to be the safest thing to do in terms of maintaining credibility. Their protection will be “…. we are not the only ones caught off guard, all the other experts have got it wrong too…”. I am sure many fund managers have the necessary information to be contrarians. In order to implement the strategy they first need to “sell’ the idea to their superiors and the investors. If the investors lose confidence during the ‘rough ride‘ money will be pull out before the intended result is materialized, and the fund manager will be reading “job classified section” on the same evening.

What I would like to see in the future is the emergence of a group of fund managers who has the necessary mandate or credibility to run against the herd whenever it is needed to maximize the returns of investors’ money. I think a “lock in” period condition will probably be a good solution. For example, I am launching a new fund call “Commando Fund”. Investors will have to lock in with me for at least 7 years. During the 7 years, if the investors choose to withdraw the money, a high fee will be charged, or the investor can transfer to another person on an “off market” deal. The maximum fund size is only RM10million each, that’s why early withdrawal is not encouraged as it will disrupt the strategy. If an investor needs to do so, the ‘high fee’ will be charged to take care of the cost of borrowing money to replace the outgoing fund. This will also help to make the fund have some healthy gearing. The fund will invest in high dividend yield stocks / bonds until there is a crash or unique situation happens “ ..something like Transmile saga…“ the fund will move in aggressively like a ‘crack commando team‘. So any takers?